Shopping The Dollar Store

Naysayers who predicted the U.S. dollar's demise are eating their words. With the financial crisis roiling world markets investors are clamoring for the stability of the greenback.

"Talk of the euro replacing the dollar is off the table," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon. "The U.S. has the only economy in the world that supports a strong currency by policy and is an anchor for the global economy."

The appeal of the dollar stems from about three key factors; investors believe that the United States is the only nation with the political will to act quickly in the face of a financial crisis of this proportion.

Also, the government and private sector infrastructure is in place to implement policies. And U.S. taxpayers have pockets that are deep enough to fund a bailout.

"The dollar looks strong technically and it’s better than most of the world’s currencies," adds Jeff Macke on CNBC's Closing Bell. "With the dollar dipping on Tuesday it might be a good time to look at the PowerShares DB US Dollar Index Bullish ETF ."

However that’s about the only long trade that looks attractive to the Wolf. “I’ve seen this movie before, you get the sharpest rallies during bear markets and this is still a bear market,” Macke says.

Don't Make This Mistake

But don’t make the mistake of getting short, either. “It’s a common misperception that you should short bear markets,” Macke says. "I don’t want to be fighting on the short side because that seems crowded. What I want to be doing is purging long positions.”

"I have long positions in McDonald’s and Wal-Mart and am now asking myself if a 10% move day to day in these companies make any sense."

In other words, it’s still clearly a case of sell the rips and buy the dips.

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